Seventy-three percent of Americans are planning some type of home renovation this year, according to a survey from LightStream, an online division of SunTrust Bank. But do they know where to begin?
LightStream recently teamed with Egypt Sherrod, host of HGTV's "Flipping Virgins" and "Property Virgins," to produce a video offering advice on which projects to tackle first in a home renovation. Sherrod, who is also a real estate broker, offers some of the following tips for you to share with clients:
Plan for the unexpected (mentally and financially)
No matter how well you plan, you'll run into unexpected expenses during a renovation project. Set aside 10% of your home improvement budget for any hiccups along the way. If you don't end up needing that money, you'll have a small pool of cash to fund future renovations.
Good bones add the most value
Don't just go for glam. There's fun in functionality! Projects like these often lead to a higher ROI compared to aesthetic-focused ones. And while they improve quality of life, they also have the potential to save a lot of time and money down the road. Here are some essential elements of a home with good bones:
- Roof and gutters: If you live in a shady area surrounded by trees, have your roof soft-washed once a year. Also, have the roof evaluated every year to ensure the weather hasn't worn down the flashings or loosened any shingles. It's a small price to pay to prolong roof life; it can be costly to replace a roof early. Don't forget to clean gutters every season, too.
- HVAC and hot water heater: Be sure to have the HVAC system serviced annually to prolong its life. Perhaps opt for a tankless water heater since it's more energy efficient. You may also want to invest in a dehumidifier, which combats moisture and mold.
- Exterior painting: It's recommended to paint the exterior of a home every seven years.
- Landscape: If you notice an unhealthy-looking tree on your property, consult an arborist to determine if the tree needs to be removed. It's better to be proactive than to later find a disease or infestation has spread to other trees or caused additional problems.
- Irrigation: It's also wise to check plumbing and irrigation systems annually. Often, lawn mowers and weather conditions can wear on them, causing expensive water leaks.
Chose timeless over trendy
It's easy to get caught up in the latest fads when considering a renovation. Bold wallpaper, shiplap walls, and waterfall countertops might be hot right now—but so were wood-paneled walls and popcorn ceilings in the past. Most people can't afford to hop on every passing trend, so it's important to consider what designs will give your home a classic facelift. Instead, opt for styles that are timeless or can be easily updated down the road without breaking the bank. Think simple, efficient, and clean.
Wallpaper is a great example of a trend that is resurfacing in renovations. But it's subjective and can be very expensive to put up and take down. Easily removable vinyl papers and stenciling are two unique alternatives that allow you to express your personal style and easily change once you're ready to switch it up.
Be smart about your upgrades
When it comes to renovations, not all systems, appliances, windows, and floors are created equally. Make smart selections that will be energy efficient and help keep cash in your pocket.
- Energy audits: Many companies offer free energy audits to check your home and identify where your energy dollars are going. These inspections can be a good place to start when you're deciding what to prioritize as you upgrade.
- Windows: Energy Star windows can lower your energy bills by 10% to 30% and are much more efficient than many single- or double-paned glass windows.
- Heated floors: Radiant heating warms a room from the floor up. As a result, most people will feel more comfortable with their thermostat set at a lower temperature, potentially saving money in the long run. The U.S. Department of Energy found that heated floors are often more efficient than baseboard heating and usually more efficient than forced-air systems because no energy is lost through ducts. This is also a great option for people with allergies, as irritating particles are not blown around the room.
- Fight allergens: Speaking of air quality, fight home allergens by replacing carpet with hardwood, installing appliances with filtration systems, and making sure your HVAC system has good air filtration systems. Everyone will breathe easier.
Invest in your nest without depleting your nest egg
Approach renovations as you would any other investment: with strategies in place to prepare, price, and pay.
- Prepare in advance: Go into your project with a clear vision and your major decisions finalized. That way, you won't be tempted by options that aren't within your set budget. It also helps keep things more efficient when scheduling contractors and inspectors. Keep in mind that it's more expensive to make changes midway through your project.
- Price it right: Stick to the Rule of Three when getting quotes—one that covers your "ideal" end result with all the bells and whistles; one that is the bare minimum; and one that lands somewhere in the middle. Having three quotes in your back pocket will give you multiple perspectives and a better foundation to negotiate with your contractors.
Plan the way to pay
A lot of people think the best thing to do when embarking on a home improvement project is to dip into their stash of cash or get a home equity line of credit. But using your rainy-day savings may leave you short in an emergency. A home equity loan can be the least expensive way to fund renovations, but many people in today's real estate market haven't accrued enough home value to tap into. Using credit cards can be an option, but high interest rates will make it a costly one. Another option: a home improvement loan, which can give those with good credit access to the funds they need—often at low interest rates and no fees.